Headlines:
- The U.S. Federal Reserve concludes its two-day monetary policy meeting today – an anticipated interest rate was unanimously approved via member vote
- A polar vortex will be joined by snowfall the rest of the week in much of the northern U.S., according to the National Weather Service
- soybean futures ease on Argentine rains
Grain markets sagged, under pressure from easing dryness fears in Argentina and a stronger dollar. Markets were subdued ahead of the US Federal Reserve announcement. Paul Georgy at Allendale noted a “risk-off attitude, reflecting concerns that the tighter monetary policy would add more strength to the dollar, further hurting US export chances. A hike in the base rate of 0.25 points, the first such move since 2015, was seen as all but a certainty, and so it proved. What was of more interest was any signal whether there would be more such rate hikes to come. The dollar turned higher on the Federal Reserve announcement, up 0.6% against a basket of world currencies as Chicago markets closed.
Summary:
Yesterday’s dry weather concerns in South America were washed away today when rain in parts of Argentina and Brazil were positive for the South American crops. Both Corn and Soybean growing regions were the recipients of beneficial rainfall. Corn futures have recently been on a positive trajectory but Soybean has been in the midst of a correction. Corn is trading near resistance and Beans is near support. If either of them break through near term support/resistance we expect to see some short term follow-through. After being weak for a good portion of the day Corn and Wheat managed to eke out positive gains and Soybean recovered about half of the day’s intraday losses.
Crude Oil futures sold off pretty big today after completing a 5-legged Elliott wave pattern from the mid-November low. It has had an impressive run that stemmed from the OPEC production reduction agreement. It reached our minimum price objective on Monday and can still be considered to be in a strong position even of the correction rolls down to about 50. The November 14 to December 12 trading range was 11.77. If the current correction holds the 50 price level the next leg up stands to move another 11.77 from the low at a minimum.
